Given the Middle East’s long and prosperous relationship with oil and gas, one could be forgiven for thinking that renewable energy may not lure many supporters here. Surprisingly, this is not the case. Numerous solar cell companies in Dubai have a proven commitment to renewable energy.

Driving alongside Knowledge Village here in Dubai, you might notice a bit of a glare coming through your windshield. No, it’s not a desert mirage. It’s the reflection from a 40-meter wide solar panel.

The panel, donated to the TELCOM building by Swedish photovoltaic outfit, Switchboard, is capable of delivering a none-too-modest 10 megawatts per year. It’s just one of the many impressive initiatives springing up around the country as the oil rich nation looks to ensure its profitable future beyond the age of oil. Already there are solar traffic lights, parking meters and offshore buoys, and many hotels nationwide now have solar heated water. But this is just the beginning.

Record high oil prices have provided a glut of petrodollar liquidity here in the UAE. The national oil and gas reserves are ranked fourth and fifth in the world respectively. But the recipients of this windfall know the age of oil won’t last forever. By diversifying their economy to include renewable energy investments, the UAE is effectively hedging their oil-heavy hand.

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has declared his commitment to the development and promotion of renewable energy initiatives. He hopes that, by 2014, Dubai will source around 14% of its peek electricity consumption from renewables as the number of solar cell companies in Dubai continues to grow.

But even more impressive than the initiatives of solar cell companies in Dubai is what’s going on just up the road, in Dubai’s sister city. Abu Dhabi, the nation’s capital, is responsible for 95% of the nation’s total oil production. It is also the home of the largest alternative energy initiative in the Middle East.

Abu Dhabi was recently voted Sustainable City of the Year at London’s Global Renewable Energy Awards. This accolade came in hot step after the UAE government initiative, Masdar, received the first World Clean Energy Award from the Transatlantic21 Association in Basel, Switzerland.

The Masdar Initiative (Masdar meaning “the source” in Arabic) is a government-sponsored project that aims to provide a global cooperative platform for the research and development of sustainable energy technologies.

Set up in May of last year, the pioneering project has modeled itself roughly on California’s Silicon Valley as a venue where competing renewable energy companies can exchange ideas and further the advancement of their cutting edge technologies.

“For us this represents a unique opportunity, knowing our position in the energy market, knowing our energy expertise and the substantial financial resources we have today,” says Sultan al- Jaber, chief executive officer at Abu Dhabi Future Energy Company (ADFEC), set up to drive the Masdar Initiative. “The question is not to replace the oil and gas sectors, it’s basically to extend the life of the oil and gas sectors and find alternatives for the future.”

As part of its commitment to furthering development for alternative energy, the Masdar initiative has set up the Masdar Clean Tech Fund. ADFEC along with the Consensus Business Group, Credit Suisse and Siemens have kicked in a total of US$250 million to get the ball rolling. The fund provides an investment vehicle that will build a portfolio of clean technology funds, direct/co-investments and joint venture initiatives.

A quick scan through the fund’s portfolio reveals a range of investments aimed at providing energy security as well as sustainable human development through the use of renewable energies.

Given that we “locals” bask under an average of 325 days of sun per year, it is hardly surprising that solar cell companies in Dubai take a large slice of the Clean Tech Fund’s pie.

One example of such a company is HelioVolt http://www.heliovolt.net/, a Texas company specializing in manufacturing thin-film photovoltaics (“PV”) solar power conversion modules. According to their website, HelioVolt, “Derives its technological edge from superior understanding of the Copper-Indum-Selenide material system, and from the revolutionary FASST process.”

FASST is a unique new method pioneered by HelioVolt to manufacture the photovoltaics layer at high rates and thus low costs. It is predicted to be less than half the cost of any other method.

The portfolio also boasts names such as Solyndra, a Californian photovoltaics company, and Sulfurcell Solartechnik GmbH, a German company also operating in the solar realm.

On the practical front, Masdar has joined forces with Foster and Partners in planning the first “zero-carbon, zero-waste” city. The six-million square meter sustainable development will be a car free zone and source its energy from, you guessed it, a massive solar farm.

With the Masdar initiative leading the way, the future for renewable energies and further expansion of solar cell companies in Dubai and across the Middle East looks bright.

“In the UAE today, we do not suffer from a lack of energy security, but we never want to suffer from it,” Sultan Al Jaber recently told the Emirates Evening Post. “We are thinking ahead of ourselves.”

Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.

I got a good feeling about Sheik Mo’ when I watched the 60 Minutes piece about him. I also like the open-source vibe of what they want to do in the UAE, Abu Dhabi and Dubai. Sheik Mo’ came across to me as one smart dude, and possibly there are other leaders like him in that area. It is likely the companies that operate there have to pass some kind of smart-guy tests. I have forwarded this to my son at MIT. Some of the smartest guys there like an open-source vibe as well.

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